Conservative challenger David Cameron won the most seats in the British election, while falling short of a majority guaranteeing the ouster of Prime Minister Gordon Brown. Gilts and the pound fell on the indecisive result.

In the first election since 1974 that failed to produce a majority, Nick Clegg, leader of the No. 3 party, said by winning a plurality in Parliament and the biggest share of the vote Cameron should have the first crack at forming a government. The rules grant Brown the first such opportunity.

“It’s now for the Conservative party to prove that it is capable of seeking to govern in the national interest,” Clegg told reporters today in London. “I’ve also said that whichever party gets the most votes and the most seats, if not an absolute majority has the first right to seek to govern, either on its own or reaching out to other parties, and I stick to that view.”

Cameron’s Conservatives took 291 seats in the 650-seat House of Commons with 620 results declared, making it impossible for them to gain outright control. Labour had 251 and Clegg’s Liberal Democrats 51. The Conservatives gained a net 96 seats and Labour lost 88.

“The constitutional position is likely to be a lot messier than the markets have been discounting,” said Marc Ostwald, an analyst at the bond brokerage Monument Securites in London. “There has been little or nothing in the way of a risk premium priced into U.K. assets.”

[7] The men who are trying to steal Britain’s election: How Mandelson and Campbell persuaded Brown to quit to kill Clegg deal with Cameron: http://www.prisonplanet.com/the-men-who-are-trying-to-steal-britains-election-how-mandelson-and-campbell-persuaded-brown-to-quit-to-kill-clegg-deal-with-cameron.html